ENTREPRENEURIAL STRATEGIES AND THE ECONOMIC DEVELOPMENT OF RURAL COMMUNITIES IN AKWA IBOM STATE

ENTREPRENEURIAL STRATEGIES AND THE ECONOMIC DEVELOPMENT OF RURAL COMMUNITIES IN AKWA IBOM STATE

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Entrepreneurship has come a long way through its evolution into becoming an integral part of every nation’s economy. Entrepreneurship is the process of generating ideas and venturing into business risk creating by dynamic environment and making the best of opportunities for profit. Hisrich (2008) define entrepreneurship as the process of creating something new with value by devoting the necessary time and effort, assuming financial physical and social risks and receiving the resulting rewards of monetary and personal satisfaction and independence. From the foregoing definitions, it can be seen that entrepreneurship is a means to an end not end in itself.

According to Aham (1999) entrepreneurship refers to the capacity and attitude of a person or a group of persons to undertake ventures with the probability of success or failure. Entrepreneurship as a process is not feasible without an entrepreneur. According to Nwachukwu (2005) entrepreneur have been defined as people who have the ability to see and evaluate business opportunities, gather the necessary resources to take advantage of them and initiate appropriate action to ensure success. A typical entrepreneur is a risk taker, a man who has uncertainty, strikes out on his own and through native with devotion of duty and singleness of purpose, somehow creates a business and industrial activity where none existed before. Basically, an entrepreneur engages in managerial activities of planning controlling, organizing, directing and coordinating the activities of his business in order to achieve success (Anugwom, 2007).

One of the most important goals of contemporary economic is determining the factors that cause economic growth or economic development. Traditional neoclassical theory holds that the economic growth of a country is determined by the supplied of both labour and capital the country posses and the level of technology present in a country. Entrepreneurship development is considered as vital link to an overall economic growth of a nation through its positive impact on economic development at the grassroots. Entrepreneurship is very vital to a nation’s economic development as they help to create wealth and reduce unemployment. They also help to increase total production (G.D.P) of a country, create jobs and innovations. As such adequate support services are required for effective performance of their crucial role in the economy. This will go a long way to reduce or eliminate poverty in a country, thereby leading to economic growth. Be that as it may, government policies and programmes most often are targeted at the various factors of our national lives and activities and it permeates the nooks and crannies of all sectors of the economy. However, Nigerian government policies are often intended to provide guide and directions to both her national and foreigners having any form of interest or relationship with the country especially in the area of entrepreneurship. Obviously, entrepreneurs are meant to identify and exploit opportunities and overt threats that are available in different business organization. Such organizations, according to Anugwom (2007) include private enterprises, public enterprises that are owned, controlled and manage by private individuals. These enterprises employ people for commercial purposes of producing either goods or services in order to achieve the objectives of the enterprise. Public enterprises that are owned and managed by the government. Public employment is used to stimulate the economy that is the unemployed people are hired by government as a device for increasing consumer spending. Co-operative societies on the other hand, are the association of persons who have voluntarily joined together to achieve a common end, through the formation of a democratically controlled organization. Partnership is coming together of two or more persons with a view of making profit. Embracing your clients is one of the futures of strategy which says that clients or customers they are the single most important component of any successful business. Without them, you have nothing no matter how great your products, services or technologies. You must be available to your clients and must learn to embrace them in each and every one of the interactions (e.g. phone, fax, email, mail) you want them to feel as though you truly value their business (you do) and that you will consistently respond to their needs and concerns (you will) if your clients feel valued and cared about, they will be yours forever. What’s more, they will refer their colleagues and associate to you, allowing you to build a strong customer base without additional marketing and advertising costs.

However, get published is one of the best strategy because when you are published people will think that you are an expert. It’s that simple, whether a book or an article, it gives you and your business instant credibility. Network is also vital by building your market visibility network of contacts and network of referrals is vital to you long term success. You cannot rely on business just knocking at your door no matter how much you spend on advertising. You can also market through multiple channels no single advertising, promotional or marketing strategy works in isolation. Marketing and business development is a combination of diversity a strategies tactics and actions that will generate client from a diversity of sources.

1.2 Statement of the Problem

When appraising the activities of enterprises or establishment in private sector, it appears that in most cases in spite of their effort in every sector of the economy their effort is scarcely felt. What borders the researcher is that, the wants to really find out whether they are carrying out their activities for their own interest without contribution to the development of the entire economy. Researcher face inadequate place of learning.

1.3 Objectives of the Study

This study has its major objective and determining how effective entrepreneurship has promoted the growth of economic development in Nigeria or Nation other objectives include:

To critically appraise the suitability of the existing in promoting investment in small scale business in the country.

To recommend ways of stimulating further the formation, promotion and growth of entrepreneurship in a country.

1.4 Research Questions

The world today is knowledge driven. That is why information Communication and Technology (ICT) occupy the centre stage in the lives of individuals communities and nations, here researcher want to look at

Stimulation of indigenous entrepreneurship

Transformation of traditional industry

And, linkage effect

1.5 Research Hypothesis

This article examines the relationship between entrepreneurial and marketing orientations of a firm. It is hypothesized that more entrepreneurial firms will also more marketing oriented. Both orientations represent strategic responses to the turbulent environments faced by firms today. Further, marketing provide an effective vehicle for achieving entrepreneurship with the corporation. As some have argued, marketing is the home for the entrepreneurial process. As a process, a firm’s entrepreneurial orientation has three key dimensions; innovativeness, risk taking, pro-activeness.

As such it does not just apply to start up ventures, but is an orientation that is applicable to organizations of any size. A firm’s marketing orientation, on the other hand refers to the size and consistency of its investment in marketing activities and people, and includes the firm’s adoption of the marketing concept (i.e. a customer orientation).

1.6 Significance of the Study

This research study will be useful to undergraduates, post graduate level, university and entrepreneurs in Akwa Ibom State. Moreover, this research study will afford an opportunity for the views of entrepreneurs to be in corporate in the discussions of government regulations concerning small scale enterprises. Finally, it will also serve as a library material for further research.

1.7 Scope or Delimitation of the Study

This research work is limited to the government policies and growth of entrepreneurs in Nigeria or Nation. To this extent all government policies formulated at the federal, state and local government levels will apply in this study but only to the extent of which they affect the operations of entrepreneurship in state. This research is also limited to some selected enterprises in the state, principally Uyo metropolis as inference would be drawn from its findings and generalizes to the entire state.

1.8 Limitation of the Study

What really stresses the writer was and things the researcher encounter was time place of learning, materials and money those are the issue that would have make the work easier for the writer to make a good and adequate study.

1.9 Definition of Terms

Government Policies: This refers to the various rules and regulations made by the government which is used to govern the conduct of business enterprises.

Entrepreneurship: We have no accepted definition of entrepreneurship for the purpose of this research, entrepreneurship can be defined as the (small scale business) as those with a total investment of between One Hundred Thousand Naira (N100,000.00) and Two Million Naira (N2,000,000.00) exclusive of land but including working capital.

Policy: Is a general statement of understanding which guide thinking, making an action.

Privatization: Is a partial or total withdrawal of government interest in public enterprises for the private sector ownership.

Investment: It can be any economic activity designed to increase, improve or maintain the productive quality of the existing stock of capital.

Commercialization: Is an act of organizing public sector enterprises to make them oriented and free from being run on government subvention.

Legitimate: Can be an act of doing something in accordance with law or with established legal and requirements. Consequently, government policies are aimed encouraging entrepreneurial development in the state.

The rate of mortality of enterprises is on the increase.

According to my observation, government policies have not been able to yield the expected result in terms of giving subsidies to the entrepreneurs, loans and favourable policies to encourage entrepreneur.

It is pertinent to find out the impact of government policies on the development and growth of entrepreneurship in Nigeria.

Entrepreneur: Is a person who is willing and able to convert a new idea or invention into a successful innovation.

Economic: It is the connection with trade, industry and development of wealth of a country, an area or a society.

Development: Is an innovative process leading to structural transformation by social system. It is also defined as the gradual growth of, so that it becomes more advance and stronger.

Strategies: Is a direction and scope of an organization over the long term, which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations.

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 Introduction

The entrepreneurship has existed for such a long time ever man decided to make a living for himself. It is a business organization at microeconomic levels premised on the initiative and intellectual line of poses owner know as entrepreneur. The condition of small scale business outfit using Nigeria in general has attracted the attentions and commentaries of concerned in general in recent time particularly school and patriotic government officials who feels married about the never improving instancing condition of the entrepreneurship person’s in their attempt to establish, develop and sustain their business ventures. The purpose of this review is to highlight the essence of entrepreneurship, their role to economic development, the problem and failure of the business and the hope or prospect of such business through making recommendations which will also be a great help for future researchers.

2.2 Conceptual/Theoretical Framework

The first difficulty encountered in taking about entrepreneurship is one of definition. In Nigeria there is no consensus on what constitutes an entrepreneurship, generally speaking in determining what should be a small business many different standards have been used.

Number of employees

Assets value

Sales volume

Financial strength

Number of location

Relative size and so on

The World Bank (2001) use the following criteria to classify firms as small scale business;

Small manufacturer firms those are relatively modern.

Organized manufacturing firms such as those engage in construction, repair, transportation and trading.

Enterprises not or organized in a modern manner example include petty traders and transport owners in the informal sector. In this regard, neither the number of people employed nor the amount on initial capital is specified. An entrepreneurship can be said to be one that requires a small amount of capital to established it, have a small number of employees and/or in most cases personally handled by the owner. They are referred to as micro business.

Characteristics of Entrepreneurship

Entrepreneurship in Nigeria is characterized by simple management, finance and production techniques. The report on small industries in Nigeria had identified the following as characteristics of small enterprises.

The manager/proprietor handles or supervises the financing, production, marketing and personnel of the enterprises.

The entrepreneur confines his vision to the local community in which he carries on his business ignoring wider and more distant markets.

The level of education of the owner/proprietor is usually low with consequent low level of business management, technical skills and market information.

Importance of Entrepreneurship

Ogundipe U. in his view wrote that the basic presumption underlying the desirability of nurturing small business is the impact they have on economic growth in general. He went further to stress that an element or urgency in supporting the sector, particularly apparent today, because of its dramatic impact of the second like foreign exchange. He also gave reasons why the importance of small scale business or entrepreneurship should be encouraged which include the following:

More rapid employment generation

Development of indigenous technology and entrepreneurship

Utilization of local resources (human and materials)

Provide a trading group for indigenous managers

Reduction of rural urban migration

A means towards development of local technology

Raising the standard of living of the populace.

The Problems of Entrepreneurship in Nigeria

The problem militating against the effective development of entrepreneurship in Nigeria, and hence having negative effect on their role an economic development can be categorized into the following:

Managerial Problem: Money is not the only crucial requirement for entrepreneurship survival and effective management. Many entrepreneurs lack the managerial skills and talents necessary for planning, organizing, directing and controlling their human material resources. Also because of their small size, small scale enterprises are unable to employ and maintain highly specialized workers in areas of accounting and management; the demand for the skills of such people by the firm may be so small as to cause workers to be under-employed.

Financial Problems: Finances is a major problem for entrepreneur in Nigeria sources of funds for this category of business include; personal savings, loans from friends and relations credit financing from financial institutions and loans from government or its agencies, in spite of all these sources of funds entrepreneur suffer from acute shortage of financial resources necessary for efficient business operations and expansions.

Infrastructure Problems: Entrepreneur is Nigeria are confronted with the problem of inadequate infrastructural facilities such as electricity, water supply, transportation, feeder roads, communications, hospital, schools, etc where these facilities are concentrated in the few urban centers thus denying the rural area where 80% of Nigeria’s need these essential facilities, this inadequacy in infrastructural has retarded the rate of industrialization and economic development.

Technological Problems: This entrepreneur also lack the technology needed for production, hence the capacity is low and the cost is high. They are identifying as having difficulty in finding a hiring professional and skilled manpower

Social Problems: The small scale businesses do not produce goods of high quality and cheaper prices as those imported from the more technologically advanced countries, this has resulted to unsatisfactory attitudes for more Nigerians towards Nigeria made good which they usually refer to as “Igbo made or Aba made” hence their preference to foreign or imported goods.

Causes of Entrepreneur Failure

There are several reasons of entrepreneur failure, to mention few are;

The business may cease its operation because profits are unsatisfactory.

The business may change ownership making is seem that the original business has failed.

The business may relocate and the empty building may signal failure or those on the outside.

The business may close one office or store to consolidate operations another apparent failure.

Management of Business

For many businesses (big or small) to survive and grow, it needs effective and efficient management of its human and material resources. Management school and practitioners are of the opinion that managers of a business generally must be able to handle a wider variety of problems and situations. They often must be their own troubleshooters, lawyer, planner, book keeper, sales person, marketing, researcher, board of directors, purchasing agent etc. in managing business, emphasis should be laid on the four main management functions; planning, organizing, directing and controlling, they guide business operations and therefore are the backbone of organizational success, especially where they are effectively handled.

The Role of Entrepreneurship in Economic Development

Entrepreneurship plays vital roles in the economic development of a nation including Nigeria. They make more efficient use of production inputs (raw materials, capital and labour) then the big ones sometimes provide places of learning and training for the development of specific and general economic activities within the economy. Moreover, the facilitate the creation and use of otherwise non-existent or unused saving Lassort and Clavier (2000). Some of the specific role which entrepreneurship in the economic development of nation of state include;

Creation of employment

Stimulation of indigenous entrepreneurship

Transformation of traditional industry

Linkage effect

Contribution to regional activity and co-operation

Creation of Employment: Entrepreneurship creates employment for the teaming population of the country or our state. For instance, Acguli indicated that about 30% of the entire labour forces are employed by small scale business entrepreneurs. In Sierra Leone, small scale entrepreneurs employ 85% of the industrial workforce.

Stimulation of Indigenous Entrepreneurship: In developing countries like Nigeria, entrepreneurship is one of the most effective means of stimulating indigenous entrepreneurship. This assertion is confirmed in works of Kibby (2001) Nwoso (2003) and Faleye (2005). By facilitating the ability in individuals and groups to start business with minimal resource requirement and by affording them the opportunity to manage the business themselves, the small scale business entrepreneurs help to build up managerial skills of the working populace.

Transportation of Traditional Industry: According to Liedhom and Chinta (2006) investment in small scale business help to transform the traditional sector. In one respect, it modernizes the handicraft prevalent in most economic activities. Moreover, the skills of traditional craftsmen are modernized and synchronized with the development in the industrial sector.

Linkage Effects: entrepreneurship helps to link up the various sectors of the economy while they constitute the market for agricultural extractive and industrial outputs, they also provide sources of material and labour input for bigger industries.

Contributions to Regional Activity and Co-operations: A reasonable quality of product manufactured by entrepreneurs in Nigeria is sold in some West Africa countries. To this extent, entrepreneurship is contributing to increase in regional business activities of Economic Community of West Africa States (ECOWAS). The benefits of regional cooperation have been elaborately discussed as a person who sees small scale industry as an establishment that employs so or more people. To the American and Japanese industries employing less than 300 and 500 workers respectively are classified as small scale business entrepreneurship.

Government Policies and its Impact on Entrepreneur

This section is devoted to review the relevance and effects, which government policies have on entrepreneurship operating in Akwa Ibom State. To accomplish this task, the researcher reviews the formation operation performance, growth and development of the enterprises. The policies under review were as follows;

The structural adjustment programme of 1986

The 1989 industrial policies of the Federal Government

The Central Bank of Nigeria (CBN) credit policy for small scale and medium scale business enterprises.

The Akwa Ibom State industrial policies.

The Structural Adjustment Programme (SAP)

One of the policy instruments which Federal government introduced in 1986 for regulation of control of economic activities in the economy was the Structural Adjustment Programme (SAP). According to Ezejehie and Osakwe SAP was meant to expand non oil exports, stimulate research and increase local sourcing of inputs, revitalize the agricultural and industrial sectors to achieve self sufficiency in food and industrial production, eliminate the accumulation of further external debts privatize commercial interest in Nigeria and adoption of realistic exchange rate policy. SAP provided a number of incentives for the manufacturing firms. Most of which are the small scale group.

Tax free dividends

Reduction in company’s income tax from 48% to 50%

Export promotion through duty deduction/suspension.

In this analysis, Ogwo stated that “the main objective of those tax relief were to enable the companies amortize expenditure on their assets within the shortest possible time to make companies to expand and earn more foreign exchange for the country. However, it should pointed out that the policy implication of structural adjustment programme (SAP) for entrepreneurship demanded that the be reviewed on a periodic basis to eliminate unpleasant effects on these firms because any adverse condition suffered by the firms would have a carryover effect on the entire economy.

The 1989 Industrial Policy of Federal Government

On January 14th, 1989, the federal government launched the industrial policy of Nigeria. This vital document embodies policies, incentives, guidelines and institutional framework for the regulation of the growth and development in Nigeria. The Industrial policy of Nigeria was given legal backing through the promulgation of decree No. 54 of 1989 and signed into law on 29th December, 1989 by President Ibrahim Babangida. In a forward to the policy. Then minister of industries, It General Akinrinade said “in spite of Nigeria’s may natural attractions to investors such as extensive market, natural resources and enormous amount of entrepreneurial talents, several factors have tended to discourage investment in the manufacturing sectors. The small scale enterprises are not left out of this analysis. According to Akinrinade. The most important of these factors include certainly about the policy environment, a restrictive and cumbersome regulatory framework and inadequate incentives. According to the industrial policy in Nigeria (1993:3) government intended to achieve accelerated pace of development. In this regard, the industrial sector comprising the small scale industrialist would become the prime over the economy.

Providing greater employment opportunities

Improving the technology, skill and capacity available in the country.

Increased local content of output

Attracting foreign capital

Increased private sector participation in the manufacturing sector.

However, some of the problems of entrepreneurship which the new policy is designed to take care are;

High geographical concentration

High production/operational costs

How value added

High import content of output

Serious underutilization of capacity

How level of foreign investment in manufacturing

Other identified problems of entrepreneurship are inadequate infrastructure, lack of executive capacity, poor capacity utilization and absence of sound technological base. The industrial policy of Nigeria 1989 on a careful analysis has potency of addressing the highlighted problems by way of the following.

Encouraging increased private sector participation in the sector and privatizing and commercializing holdings in certain existing enterprise with emphasis on the small scale organizations.

Playing a catalytic role establishing new core industries.

Providing and improving infrastructural facilities

Establishing a clear set of priorities

Harmonizing industries policies of the federal, state and local government

Some of the incentives which are designed to promote investment employment, product mix and other aspect of the industry are packaged in the policy.

Fiscal and monetary measures

Effective protection with import tariffs

Development banking

Foreign promotion of Nigeria products

As a follow up to 1989 policy, the federal government also adopted several strategies aimed at promoting investment especially in the 7 sector of the economy. Among the several strategies employed by the government are;

Encouragement of bilateral trade relationship with other countries.

Liberalization of access to foreign exchange by individuals and companies through the foreign exchange market.

In this chapter, the researcher focus was on reviewing of writings and opinions of other authors and expert in order to form a theoretical basis upon which this research work is founded. The review is organized under sub headings which discuss relevant concepts embodied in the research topic.

Economic: It is the connection with trade, industry and development of wealth of a country, an area of a society.

Development: Is an innovative process leading to structural transformation by social system. It is also defined as the gradual growth so that it becomes more advanced and stronger.

Strategy: Is a direction and scope of an organization to meet the needs of markets and fulfill stakeholder expectation.